Mortality Table
A mortality table is a statistical chart showing the probability of death at each age, used by life insurance companies to calculate premiums, reserves, and the expected length of life for policyholders.
Exam Tip
Mortality table = probability of DEATH by age. CSO 2017 is current standard. Used to price life insurance. "Law of large numbers" makes predictions work.
What is a Mortality Table?
A mortality table (also called a life table or actuarial table) is a statistical tool that shows the probability of death for people at different ages. Life insurance companies use these tables to price policies and determine reserves needed to pay future claims.
Key Components
| Column | Description |
|---|---|
| Age (x) | Current age of individual |
| lx | Number living at start of year |
| dx | Number dying during year |
| qx | Probability of death at age x |
| px | Probability of survival at age x |
| ex | Life expectancy at age x |
Example Mortality Table Extract
| Age | Living (lx) | Deaths (dx) | Death Rate (qx) |
|---|---|---|---|
| 30 | 97,500 | 120 | 0.00123 |
| 40 | 95,800 | 200 | 0.00209 |
| 50 | 92,600 | 450 | 0.00486 |
| 60 | 85,400 | 1,100 | 0.01288 |
Types of Mortality Tables
| Type | Use |
|---|---|
| Commissioner's Standard Ordinary (CSO) | Life insurance pricing |
| Ultimate Tables | Excludes select period deaths |
| Select Tables | Recently underwritten lives |
| Aggregate Tables | Combined data |
Insurance Applications
| Application | How Used |
|---|---|
| Premium Calculation | Base rates on death probability |
| Reserve Calculation | Set aside funds for future claims |
| Product Design | Determine coverage terms |
| Underwriting | Assess individual risk vs. table |
CSO Tables Evolution
| Table | Year | Notes |
|---|---|---|
| 1980 CSO | 1980 | Long-used standard |
| 2001 CSO | 2001 | Reflected improved longevity |
| 2017 CSO | 2017 | Current standard, even longer lives |
Factors Reflected in Tables
| Factor | Impact |
|---|---|
| Age | Higher mortality with age |
| Gender | Women live longer on average |
| Smoker Status | Separate tables for smokers |
| Health Class | Preferred, standard, substandard |
Law of Large Numbers
Mortality tables rely on:
- Large population samples
- Predictable group behavior
- Statistical probability
- Historical data patterns
Individual outcomes vary, but group behavior is predictable.
Impact on Premiums
| Age | Mortality Risk | Premium Impact |
|---|---|---|
| Younger | Lower death probability | Lower premium |
| Older | Higher death probability | Higher premium |
Study This Term In
Related Terms
Morbidity
InsuranceMorbidity refers to the incidence of illness or disease within a population, used by insurance companies to predict the likelihood of disability claims and to calculate health and disability insurance premiums.
Underwriting
InsuranceUnderwriting is the process by which an insurance company evaluates risk and determines whether to accept an application for coverage and at what premium rate.
Premium (Insurance)
InsuranceAn insurance premium is the amount paid by the policyholder to the insurance company for coverage, typically paid monthly, quarterly, or annually.